ck0001616668-20220430
4974/30/2022Pacer Funds Trust0001616668false5/6/2022N-1A00016166682022-06-072022-06-070001616668ck0001616668:S000075916Memberck0001616668:C000235289Member2022-06-072022-06-070001616668ck0001616668:C000235290Memberck0001616668:S000075917Member2022-06-072022-06-070001616668ck0001616668:S000075916Member2022-06-072022-06-07xbrli:pureiso4217:USD0001616668ck0001616668:S000075917Member2022-06-072022-06-07
PROSPECTUS
June 7,
2022
|
|
|
|
|
|
TRFK |
Pacer
Data and Digital Revolution ETF |
SHPP |
Pacer
Industrials and Logistics ETF |
Listed
on NYSE Arca, Inc.
The
U.S. Securities and Exchange Commission (“SEC”) has not approved or disapproved
of these securities or passed upon the accuracy or adequacy of this Prospectus.
Any representation to the contrary is a criminal offense.
INVESTMENT
PRODUCTS: *ARE
NOT FDIC INSURED *MAY
LOSE VALUE *ARE
NOT BANK GUARANTEED
Table
of Contents
SUMMARY
SECTION
Investment Objective
The Pacer Data and Digital Revolution
ETF (the “Fund”) employs a “passive management” (or indexing)
investment approach designed to track the total return performance, before fees
and expenses, of the Pacer Data Transmission and Communication Revolution Index
(the “Index”).
Fees and Expenses of the
Fund
The
following table describes the fees and expenses you may pay if you buy, hold,
and sell shares of the Fund (“Shares”). You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the tables and examples
below.
|
|
|
|
|
|
Annual
Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your
investment) |
|
Management
Fees |
0.60% |
Distribution
and/or Service (12b-1) Fees |
None |
Other
Expenses* |
0.00% |
Total
Annual Fund Operating Expenses |
0.60% |
*
Estimated for the current
fiscal year
Example
The following example
is intended to help retail investors compare the cost of investing in the Fund
with the cost of investing in other funds. It illustrates the hypothetical
expenses that such investors would incur over various periods if they were to
invest $10,000 in the Fund for the time periods indicated and then redeem all of
the Shares at the end of those periods. This example assumes that the Fund
provides a return of 5% a year and that operating expenses remain the
same. Although your actual costs may be higher
or lower, based on these assumptions, your costs would be:
Portfolio
Turnover
The Fund pays transaction
costs, such as commissions, when it buys and sells securities (or “turns over”
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Fund Shares are held in a taxable
account. These costs, which are not reflected in annual fund operating expenses
or in the example, affect the Fund’s performance. Because the Fund is newly
organized, portfolio turnover information is not yet
available.
Principal Investment Strategies of the
Fund
The
Fund employs a “passive management” (or indexing) investment approach designed
to track the total return performance, before fees and expenses, of the Index.
The Index is based on a proprietary methodology developed and maintained by
Index Design Group (the “Index Provider” or “IDG”), an affiliate of Pacer
Advisors, Inc., the Fund’s investment adviser (the “Adviser”).
Pacer
Data Transmission and Communication Revolution Index
The
Index is a rules-based index that consists of globally-listed stocks and
depositary receipts of companies that, at the time of being added to the Index,
derive at least 50% of their revenues from one of the following activities
related to the use, manipulation, transmission, or storage of data (i.e.,
information that is stored in a digital or electronic format) and the ancillary
services that enable these processes (i.e.,
services that enable companies to use, manipulate, transmit, or store data):
electrical equipment and component manufacturing; automatic environmental
control or heating and cooling equipment; computer storage device manufacturing;
computer systems design services; computer equipment or telephone
equipment
manufacturing; custom computer programming or record reproducing services; data
processing and hosting services; software publishing; semiconductor
manufacturing; wireless communications equipment manufacturing; communication
and energy wire or wiring device manufacturing or producers of raw materials;
cybersecurity systems and data protection services; power and distribution
transformer manufacturing; satellite and digital telecommunications; electrical
equipment component manufacturing; industrial value manufacturing; commercial
machinery manufacturing; instruments used for measuring, displaying, and
controlling industrial process variables (e.g.,
instruments used for testing electricity and glass thermometers for non-medical
uses); computer facilities management services; or electrical equipment or
wiring supplies wholesalers (collectively, “Data and Digital Revolution”), as
determined by the Index Provider.
To
be added to the Index, an Index component must have a market capitalization
greater than or equal to US$1 billion, have a three-month
average-daily-value-traded of at least US$2 million, and must be a
publicly-traded equity security that is the primary listing security on a major
stock exchange (collectively, the Index’s “Investibility Requirements”). The
Index may include companies of any market capitalization that meets the
Investibility Requirements, but has significant exposure to large- and
mid-capitalization companies.
Data
and Digital Revolution companies include companies in the Information Technology
Sector and the Industrials Sector, as categorized by a third-party
classification system. Index constituents meeting the Investibility Requirements
are screened by the Index Provider from the universe of globally-listed stocks
based primarily on descriptions of a company’s business activities in regulatory
filings (e.g.,
financial statements, annual reports, investor presentations), analyst reports,
a company’s website, and industry-specific trade publications.
The
Index is reconstituted and rebalanced (i.e.,
companies are added or deleted and weights are reset based on Index rules) on an
annual basis as of the close of business on the last trading day in April. Index
Constituents are weighted based on their free-float market capitalization
(i.e.,
market capitalization based on the number of shares available to the public),
subject to the following constraints as of the time of each reconstitution of
the Index. Each Index Constituent’s weight is capped at 10% and the sum of Index
Constituents with weights greater than 4.5% cannot exceed 45% of the total Index
weight. If the foregoing limits would be exceeded at the time of a
reconstitution of the Index, the excess weight is proportionally redistributed
to all Index Constituents with weights below such limits.
As
of January 10, 2022, the Index was composed of 110 constituents, 20 of which
were listed on a non-U.S. exchange. The Index was established in 2022 and is
owned and maintained by the Index Provider.
The
Fund’s Investment Strategy
The
Fund will generally use a “replication” strategy to achieve its investment
objective, meaning it will invest in all of the component securities of the
Index.
To
the extent the Index concentrates (i.e., holds more than 25% of its total assets)
in the securities of a particular industry or group of related industries, the
Fund will concentrate its investments to approximately the same extent as the
Index. The Index, and consequently the Fund, is expected to have significant
exposure to companies in the Industrials and Information Technology
Sectors. As of January 10, 2022, the Index had significant
exposure to European companies. The Fund is non-diversified and therefore may
invest a larger percentage of its assets in the securities of a single issuer or
small number of issuers than diversified funds.
Principal Risks of Investing in the
Fund
You can lose money on your investment in the
Fund. The Fund is subject to the risks summarized below. Some or
all of these risks may adversely affect the Fund’s net asset value per share
(“NAV”), trading price, yield, total return and/or ability to meet its
objectives. For more information about the risks of investing in the Fund, see
the section in the Fund’s prospectus entitled “Additional Information about the
Principal Risks of Investing in the Funds.” The principal risks are presented in
alphabetical order to facilitate finding particular risks and comparing them
with other funds. Each risk summarized below is considered a “principal risk” of
investing in the Fund, regardless of the order in which it appears.
▪Associated
Risks of Data and Digital Revolution Companies. Data
and digital revolution companies include companies that develop and provide
goods and services related to the transmission of data and communications.
Transmission and communications services companies are subject to extensive
government regulation. The costs of
complying
with governmental regulations, delays or failure to receive required regulatory
approvals, or the enactment of new adverse regulatory requirements may adversely
affect the business of such companies. Such companies are also subject to
intense competition and thus affected by mergers or consolidations by and among
customers, competition with alternative technologies such as wireless
communications (including with 5G and other technologies), product
compatibility, consumer preferences, rapid product obsolescence, and research
and development of new products. Technological innovations may make the products
and services of such companies obsolete. As a result, the value of the Fund’s
shares may rise and fall more than the value of shares of a fund that invests in
securities of companies in a broader range of industries.
▪Calculation
Methodology Risk.
The Index relies directly or indirectly on various sources of information to
assess the criteria of issuers included in the Index, including information that
may be based on assumptions and estimates. Neither the Fund, the Index Provider,
or the Adviser can offer assurances that the Index’s calculation methodology or
sources of information will provide an accurate assessment of included issuers
or a correct valuation of securities, nor can they guarantee the availability or
timeliness of the production of the Index.
▪Currency
Exchange Rate Risk. The
Fund’s assets may include investments denominated in non-U.S. currencies, such
as the euro, or in securities or other assets that provide exposure to such
currencies. Changes in currency exchange rates and the relative value of
non-U.S. currencies will affect the value of the Fund’s investment and the value
of your Fund shares. Currency exchange rates can be very volatile and can change
quickly and unpredictably. As a result, the value of an investment in the Fund
may change quickly and without warning and you may lose money.
▪Equity
Market Risk. The
equity securities held in the Fund’s portfolio may experience sudden,
unpredictable drops in value or long periods of decline in value. This may occur
because of factors that affect securities markets generally or factors affecting
specific industries, sectors or companies in which the Fund invests. Common
stocks are susceptible to general stock market fluctuations and to volatile
increases and decreases in value as market confidence in and perceptions of
their issuers change. The Fund’s NAV and market price may fluctuate
significantly in response to these and other factors. As a result, an investor
could lose money over short or long periods of time.
▪ETF
Risks.
The Fund is an ETF and, as a result of an ETF’s structure, is exposed to the
following risks:
•Authorized
Participants (“APs”), Market Makers, and Liquidity Providers Concentration
Risk.
The
Fund has a limited number of financial institutions that may act as APs. In
addition, there may be a limited number of market makers and/or liquidity
providers in the marketplace. To the extent either of the following events
occur, shares of the Fund may trade at a material discount to NAV and possibly
face delisting: (i) APs exit the business or otherwise become unable to
process creation and/or redemption orders and no other APs step forward to
perform these services, or (ii) market makers and/or liquidity providers
exit the business or significantly reduce their business activities and no other
entities step forward to perform their functions.
◦Cash
Redemption Risk. The
Fund’s investment strategy may require it to redeem Shares for cash or to
otherwise include cash as part of its redemption proceeds. The Fund may be
required to sell or unwind portfolio investments to obtain the cash needed to
distribute redemption proceeds. This may cause the Fund to recognize a capital
gain that it might not have recognized if it had made a redemption in-kind. As a
result, the Fund may pay out higher annual capital gain distributions than if
the in-kind redemption process was used.
•Costs
of Buying or Selling Shares of the Fund.
Due to the costs of buying or selling shares of the Fund, including brokerage
commissions imposed by brokers and bid/ask spreads, frequent trading of shares
of the Fund may significantly reduce investment results and an investment in
shares of the Fund may not be advisable for investors who anticipate regularly
making small investments.
◦Shares
of the Fund May Trade at Prices Other Than NAV.
As with all ETFs, shares of the Fund may be bought and sold in the secondary
market at market prices. The price of shares of the Fund, like the price of all
traded securities, will be subject to factors such as supply and demand, as well
as the current value of the Fund’s portfolio holdings. Although it is expected
that the market price of the shares of the Fund will approximate the Fund’s NAV,
there may be times when the market price of the shares is more than the NAV
intra-day (premium) or less than the NAV intra-day (discount). This risk is
heightened in times of market volatility, periods of steep market declines, and
periods when there is limited trading activity for shares in the secondary
market, in which
case
such premiums or discounts may be significant. Because securities held by the
Fund trade on foreign exchanges that are closed when the Fund’s primary listing
exchange is open, the Fund is likely to experience premiums and discounts
greater than those of domestic ETFs.
◦Trading.
Although shares of the Fund are listed for trading on a national securities
exchange, such as NYSE Arca, Inc. (the “Exchange”), and may be traded on U.S.
exchanges other than the Exchange, there can be no assurance that shares of the
Fund will trade with any volume, or at all, on any stock exchange. In stressed
market conditions, the liquidity of shares of the Fund may begin to mirror the
liquidity of the Fund’s underlying portfolio holdings, which can be
significantly less liquid than shares of the Fund, and this could lead to
differences between the market price of the shares of the Fund and the
underlying value of those shares.
▪Foreign
Securities Risk. Investments
in non-U.S. securities involve certain risks that may not be present with
investments in U.S. securities. For example, investments in non-U.S. securities
may be subject to risk of loss due to foreign currency fluctuations or to
political or economic instability. Investments in non-U.S. securities also may
be subject to withholding or other taxes and may be subject to additional
trading, settlement, custodial, and operational risks. These and other factors
can make investments in the Fund more volatile and potentially less liquid than
other types of investments.
▪Geographic
Concentration Risk. To
the extent the Fund invests a significant portion of its assets in the
securities of companies of a single country or region, it is more likely to be
impacted by events or conditions affecting that country or region.
•Risks
Related to Investing in Europe.
The economies and markets of European countries are often closely connected and
interdependent, and events in one country in Europe can have an adverse impact
on other European countries. The Fund makes investments in securities of issuers
that are domiciled in, or have significant operations in, member countries of
the European Union (“EU”) that are subject to economic and monetary controls
that can adversely affect the Fund’s investments. The European financial markets
have experienced volatility and adverse trends in recent years and these events
have adversely affected the exchange rate of the euro and may continue to
significantly affect other European countries. Decreasing imports or exports,
changes in governmental or EU regulations on trade, changes in the exchange rate
of the euro, the default or threat of default by an EU member country on its
sovereign debt, and/or an economic recession in an EU member country may have a
significant adverse effect on the economies of EU member countries and their
trading partners, including some or all of the European countries in which the
Fund invests.
▪International
Operations Risk. Investments
in companies with significant business operations outside of the United States
may involve certain risks that may not be present with investments in U.S.
companies. For example, international operations may be subject to risk of loss
due to foreign currency fluctuations; changes in foreign political and economic
environments, regionally, nationally, and locally; challenges of complying with
a wide variety of foreign laws, including corporate governance, operations,
taxes, and litigation; differing lending practices; differences in cultures;
changes in applicable laws and regulations in the United States that affect
international operations; changes in applicable laws and regulations in foreign
jurisdictions; difficulties in managing international operations; and obstacles
to the repatriation of earnings and cash. These and other factors can make an
investment in the Fund more volatile than other types of investments.
▪Market
Capitalization Risk.
◦Large-Capitalization
Investing.
The securities of large-capitalization companies may be relatively mature
compared to smaller companies and therefore subject to slower growth during
times of economic expansion.
◦Mid-Capitalization
Investing.
The securities of mid-capitalization companies may be more vulnerable to adverse
issuer, market, political, or economic developments than securities of
large-capitalization companies. The securities of mid-capitalization companies
generally trade in lower volumes and are subject to greater and more
unpredictable price changes than large-capitalization stocks or the stock market
as a whole.
▪New
Fund Risk. The
Fund is new with no operating history. As a result, there can be no assurance
that the Fund will grow to or maintain an economically viable size, in which
case it may experience greater tracking error to its Index than it otherwise
would at higher asset levels, or it could ultimately liquidate. The Fund’s
distributor does not maintain a secondary market in Fund shares.
▪Non-Diversification
Risk. Although the Fund intends to invest in a
variety of securities and instruments, the Fund is considered to be
non-diversified, which means that it may invest more of its assets in the
securities of a single issuer or a smaller number of issuers than if it were a
diversified fund. As a result, the Fund may be more exposed to the risks
associated with and developments affecting an individual issuer or a smaller
number of issuers than a fund that invests more widely. This may increase the
Fund’s volatility and cause the performance of a relatively smaller number of
issuers to have a greater impact on the Fund’s performance.
▪Passive
Investment Risk. The
Fund is not actively managed and the Adviser would not sell a security due to
current or projected underperformance of a security, industry or sector, unless
that security is removed from the Index or the selling of shares of that
security is otherwise required upon a reconstitution of the Index in accordance
with the Index methodology. The Fund invests in securities included in the
Index, regardless of their investment merits. The Fund does not take defensive
positions under any market conditions, including conditions that are adverse to
the performance of the Fund.
▪Sector
Risk. To
the extent the Fund invests more heavily in particular sectors of the economy,
its performance will be especially sensitive to developments that significantly
affect those sectors.
▪Industrials
Sector Risk.
The Fund may invest in companies in the industrials sector, and therefore the
performance of the Fund could be negatively impacted by events affecting this
sector. The industrials sector may be affected by changes in the supply of and
demand for products and services, product obsolescence, claims for environmental
damage or product liability and general economic conditions, among other
factors.
▪Information
Technology Sector Risk. The
Fund may invest in companies in the information technology sector, and therefore
the performance of the Fund could be negatively impacted by events affecting
this sector. Market or economic factors impacting information technology
companies and companies that rely heavily on technological advances could have a
significant effect on the value of the Fund’s investments. The value of stocks
of information technology companies and companies that rely heavily on
technology is particularly vulnerable to rapid changes in technology product
cycles, rapid product obsolescence, government regulation and competition, both
domestically and internationally, including competition from foreign competitors
with lower production costs. Stocks of information technology companies and
companies that rely heavily on technology, especially those of smaller,
less-seasoned companies, tend to be more volatile than the overall market.
Information technology companies are heavily dependent on patent and
intellectual property rights, the loss or impairment of which may adversely
affect profitability.
▪Tracking
Error Risk.
As with all index funds, the performance of the Fund and its Index may differ
from each other for a variety of reasons. For example, the Fund incurs operating
expenses and portfolio transaction costs not incurred by the Index. In addition,
the Fund may not be fully invested in the securities of the Index at all times
or may hold securities not included in the Index.
Fund
Performance
Performance information for the Fund is not
included because the Fund did not commence operations prior to the date of this
Prospectus. In the future, performance for the Fund will be
presented in this section. Updated performance information will be available on
the Fund’s website at www.PacerETFs.com
or by calling the Fund toll-free at 1-877-337-0500.
Management
Investment
Adviser
Pacer
Advisors, Inc. (the “Adviser”) serves as investment adviser to the
Fund.
Portfolio
Managers
Bruce
Kavanaugh, Vice President of the Adviser, and Danke Wang, CFA, Head Portfolio
Analyst and Portfolio Manager for the Adviser, are jointly and primarily
responsible for the day-to-day management of the Fund and have served as
portfolio managers since the Fund’s inception.
Buying
and Selling Fund Shares
The
Fund is an ETF. This means that individual Shares of the Fund may only be
purchased and sold in the secondary market through brokers at market prices,
rather than NAV. Because Shares trade at market prices rather than NAV, Shares
may trade at a price greater than NAV (premium) or less than NAV
(discount).
The
Fund generally issues and redeems shares at NAV only in large blocks of shares
known as “Creation Units,” which only institutions or large investors may
purchase or redeem. The Fund generally issues and redeems Creation Units in
exchange for a portfolio of securities (the “Deposit Securities”) and/or a
designated amount of U.S. cash that the Fund specifies each day.
Investors
may incur costs attributable to the difference between the highest price a buyer
is willing to pay to purchase Shares (bid) and the lowest price a seller is
willing to accept for Shares (ask) when buying or selling Shares in the
secondary market (the “bid-ask spread”). Recent information about the Fund,
including its net asset value, market price, premiums and discounts, and bid-ask
spreads is available on the Fund’s website at www.PacerETFs.com.
Tax
Information
Fund
distributions are generally taxable as ordinary income, qualified dividend
income, or capital gains (or a combination), unless your investment is in an IRA
or other tax-advantaged retirement account. Distributions may be taxable upon
withdrawal from tax-deferred accounts.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase the Fund through a broker or other financial intermediary (such as
a bank), the Adviser, and their related companies may pay the intermediary for
activities related to the marketing and promotion of the Fund. These payments
may create a conflict of interest by influencing the broker-dealer or other
intermediary and your sales person to recommend the Fund over another
investment. Ask your sales person or visit your financial intermediary’s website
for more information.
Investment Objective
The Pacer Industrials and Logistics ETF
(the “Fund”) employs a “passive management” (or indexing) investment approach
designed to track the total return performance, before fees and expenses, of the
Pacer Global Supply Chain Infrastructure Index (the “Index”).
Fees and Expenses of the
Fund
The
following table describes the fees and expenses you may pay if you buy, hold,
and sell shares of the Fund (“Shares”). You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the tables and examples
below.
|
|
|
|
|
|
Annual
Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your
investment) |
|
Management
Fees |
0.60% |
Distribution
and/or Service (12b-1) Fees |
None |
Other
Expenses* |
0.00% |
Total
Annual Fund Operating Expenses |
0.60% |
*
Estimated for the current
fiscal year
Example
The following example
is intended to help retail investors compare the cost of investing in the Fund
with the cost of investing in other funds. It illustrates the hypothetical
expenses that such investors would incur over various periods if they were to
invest $10,000 in the Fund for the time periods indicated and then redeem all of
the Shares at the end of those periods. This example assumes that the Fund
provides a return of 5% a year and that operating expenses remain the
same. Although your actual costs may be higher
or lower, based on these assumptions, your costs would be:
Portfolio
Turnover
The Fund pays transaction
costs, such as commissions, when it buys and sells securities (or “turns over”
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Fund Shares are held in a taxable
account. These costs, which are not reflected in annual fund operating expenses
or in the example, affect the Fund’s performance. Because the Fund is newly
organized, portfolio turnover information is not yet
available.
Principal Investment Strategies of the
Fund
The
Fund employs a “passive management” (or indexing) investment approach designed
to track the total return performance, before fees and expenses, of the Index.
The Index is based on a proprietary methodology developed and maintained by
Index Design Group (the “Index Provider” or “IDG”), an affiliate of Pacer
Advisors, Inc., the Fund’s investment adviser (the “Adviser”).
Pacer
Global Supply Chain Infrastructure Index
The
Index consists of globally-listed stocks and depositary receipts of industrials
and logistics companies, as described below. Companies eligible to be added to
the Index are those that derive at least 50% of their revenue from the following
activities: (i) transportation, including air, ocean, and rail freight, long and
short haul trucking, and other courier services that contribute to the movement
of products within global supply chains; (ii) software, including transportation
management services, logistics software, and other software services that enable
companies to draw insights and maximize supply chain efficiency; (iii) hardware,
including robotics, forklifts, and other equipment that is instrumental in the
logistics process such as conveyor belt technology in warehouses; or (iv)
consulting companies responsible for increasing the efficiency of companies with
operations in supply chain and logistics management (collectively,
“Industrials
and Logistics”), as determined by the Index Provider. “Industrials” companies
are those companies that are engaged in the research, development, manufacture,
distribution, supply, or sale of industrial products, services, or equipment
(e.g.,
capital goods, construction services, machinery, and transportation).
“Logistics” companies are those companies involved in the supply chain movements
required to move raw materials, intermediate goods, and finished products around
the world (e.g.,
the provision of logistics support, logistics software, rail and air freight,
trucking, and marine shipping).
To
be added to the Index, an Index component must have a market capitalization
greater than or equal to US$1 billion, have a three-month
average-daily-value-traded of at least US$2 million, and must be a
publicly-traded equity security that is the primary listing security on a major
stock exchange (collectively, the Index’s “Investibility Requirements”). The
Index may include companies of any market capitalization that meets the
Investibility Requirements, but has significant exposure to large- and
mid-capitalization companies.
Industrials
and Logistics companies include companies in the Information Technology Sector
and the Industrials Sector, as categorized by a third-party classification
system. Index constituents meeting the Investibility Requirements are screened
by the Index Provider from the universe of globally-listed stocks based
primarily on descriptions of a company’s business activities in regulatory
filings (e.g.,
financial statements, annual reports, investor presentations), analyst reports,
a company’s website, and industry-specific trade publications.
The
Index is reconstituted and rebalanced (i.e.,
companies are added or deleted and weights are reset based on Index rules) on an
annual basis as of the close of business on the last trading day in April. Index
Constituents are weighted based on their free-float market capitalization
(i.e.,
market capitalization based on the number of shares available to the public),
subject to the following constraints as of the time of each reconstitution of
the Index. Each Index Constituent’s weight is capped at 10% and the sum of Index
Constituents with weights greater than 4.5% cannot exceed 45% of the total Index
weight. If the foregoing limits would be exceeded at the time of a
reconstitution of the Index, the excess weight is proportionally redistributed
to all Index Constituents with weights below such limits.
As
of January 10, 2022, the Index was composed of 185 constituents, 107 of which
were listed on a non-U.S. exchange. The Index was established in 2022 and is
owned and maintained by the Index Provider.
The
Fund’s Investment Strategy
Under
normal circumstances, at least 80% of the Fund’s net assets (plus any borrowings
for investment purposes) will be invested in companies that derive at least 50%
of their revenues from Industrials and Logistics, as defined above.
The
Fund will generally use a “replication” strategy to achieve its investment
objective, meaning it will invest in all of the component securities of the
Index.
To
the extent the Index concentrates (i.e., holds more than 25% of its total assets)
in the securities of a particular industry or group of related industries, the
Fund will concentrate its investments to approximately the same extent as the
Index. The Index, and consequently the Fund, is expected to have significant
exposure to companies in the Industrials and Information Technology
Sectors. As of January 10, 2022, the Index had significant
exposure to companies in Europe, Hong Kong, South Korea, and Japan. The Fund is
non-diversified and therefore may invest a larger percentage of its assets in
the securities of a single issuer or small number of issuers than diversified
funds.
Principal Risks of Investing in the
Fund
You can lose money on your investment in the
Fund. The Fund is subject to the risks summarized below. Some or
all of these risks may adversely affect the Fund’s net asset value per share
(“NAV”), trading price, yield, total return and/or ability to meet its
objectives. For more information about the risks of investing in the Fund, see
the section in the Fund’s prospectus entitled “Additional Information about the
Principal Risks of Investing in the Funds.” The principal risks are presented in
alphabetical order to facilitate finding particular risks and comparing them
with other funds. Each risk summarized below is considered a “principal risk” of
investing in the Fund, regardless of the order in which it
appears.
▪Associated
Risk of Industrials and Logistics Companies. Industrials
and Logistics companies support the global supply chain. These companies may be
adversely affected by a downturn in economic conditions that can result in
decreased demand for shipping, ports, trade routes, and freight. Such companies
may also be significantly affected by changes in fuel prices, which may be very
volatile, the imposition of tariffs or trade wars, changes in labor relations or
availability, labor strikes, insurance costs, commodities prices in general,
international politics and conflicts, changes in transportation patterns,
changes to shipping and air freight routes, weather patterns and events,
including hurricane activity, road conditions, pandemic diseases, the
congestion, blockage or shutdown of key routes, ports, and canals, commodity
prices, taxes, tariffs, trade wars, imposition of emissions standards and other
environment-related rules and regulations, domestic or international politics
and conflicts, including war or threat of war, computer and/or software
malfunction, logistics interference, piracy, cyber attacks and terrorism.
Industrials and Logistics companies may also be highly dependent on aircraft,
ships, trucks, heavy machinery, technology, or related equipment from a small
number of suppliers, and consequently, issues affecting the availability,
reliability, safety, or longevity of such equipment may have a significant
effect on the operations and profitability of such companies. In addition,
regulatory changes and competition from foreign companies subject to more
favorable government regulation may affect the success of these
companies.
▪Calculation
Methodology Risk.
The Index relies directly or indirectly on various sources of information to
assess the criteria of issuers included in the Index, including information that
may be based on assumptions and estimates. Neither the Fund, the Index Provider,
or the Adviser can offer assurances that the Index’s calculation methodology or
sources of information will provide an accurate assessment of included issuers
or a correct valuation of securities, nor can they guarantee the availability or
timeliness of the production of the Index.
▪Currency
Exchange Rate Risk. The
Fund’s assets may include investments denominated in non-U.S. currencies, such
as the euro, or in securities or other assets that provide exposure to such
currencies. Changes in currency exchange rates and the relative value of
non-U.S. currencies will affect the value of the Fund’s investment and the value
of your Fund shares. Currency exchange rates can be very volatile and can change
quickly and unpredictably. As a result, the value of an investment in the Fund
may change quickly and without warning and you may lose money.
▪Equity
Market Risk. The
equity securities held in the Fund’s portfolio may experience sudden,
unpredictable drops in value or long periods of decline in value. This may occur
because of factors that affect securities markets generally or factors affecting
specific industries, sectors or companies in which the Fund invests. Common
stocks are susceptible to general stock market fluctuations and to volatile
increases and decreases in value as market confidence in and perceptions of
their issuers change. The Fund’s NAV and market price may fluctuate
significantly in response to these and other factors. As a result, an investor
could lose money over short or long periods of time.
▪ETF
Risks.
The Fund is an ETF and, as a result of an ETF’s structure, is exposed to the
following risks:
•Authorized
Participants (“APs”), Market Makers, and Liquidity Providers Concentration
Risk.
The
Fund has a limited number of financial institutions that may act as APs. In
addition, there may be a limited number of market makers and/or liquidity
providers in the marketplace. To the extent either of the following events
occur, shares of the Fund may trade at a material discount to NAV and possibly
face delisting: (i) APs exit the business or otherwise become unable to
process creation and/or redemption orders and no other APs step forward to
perform these services, or (ii) market makers and/or liquidity providers
exit the business or significantly reduce their business activities and no other
entities step forward to perform their functions.
◦Cash
Redemption Risk. The
Fund’s investment strategy may require it to redeem Shares for cash or to
otherwise include cash as part of its redemption proceeds. The Fund may be
required to sell or unwind portfolio investments to obtain the cash needed to
distribute redemption proceeds. This may cause the Fund to recognize a capital
gain that it might not have recognized if it had made a redemption in-kind. As a
result, the Fund may pay out higher annual capital gain distributions than if
the in-kind redemption process was used.
•Costs
of Buying or Selling Shares of the Fund.
Due to the costs of buying or selling shares of the Fund, including brokerage
commissions imposed by brokers and bid/ask spreads, frequent trading of shares
of the Fund may significantly reduce investment results and an investment in
shares of the Fund may not be advisable for investors who anticipate regularly
making small investments.
▪Shares
of the Fund May Trade at Prices Other Than NAV.
As with all ETFs, shares of the Fund may be bought and sold in the secondary
market at market prices. The price of shares of the Fund, like the price of all
traded securities, will be subject to factors such as supply and demand, as well
as the current value of the Fund’s portfolio holdings. Although it is expected
that the market price of the shares of the Fund will approximate the Fund’s NAV,
there may be times when the market price of the shares is more than the NAV
intra-day (premium) or less than the NAV intra-day (discount). This risk is
heightened in times of market volatility, periods of steep market declines, and
periods when there is limited trading activity for shares in the secondary
market, in which case such premiums or discounts may be significant. Because
securities held by the Fund trade on foreign exchanges that are closed when the
Fund’s primary listing exchange is open, the Fund is likely to experience
premiums and discounts greater than those of domestic ETFs.
▪Trading.
Although shares of the Fund are listed for trading on a national securities
exchange, such as NYSE Arca, Inc. (the “Exchange”), and may be traded on U.S.
exchanges other than the Exchange, there can be no assurance that shares of the
Fund will trade with any volume, or at all, on any stock exchange. In stressed
market conditions, the liquidity of shares of the Fund may begin to mirror the
liquidity of the Fund’s underlying portfolio holdings, which can be
significantly less liquid than shares of the Fund, and this could lead to
differences between the market price of the shares of the Fund and the
underlying value of those shares.
▪Foreign
Securities Risk. Investments
in non-U.S. securities involve certain risks that may not be present with
investments in U.S. securities. For example, investments in non-U.S. securities
may be subject to risk of loss due to foreign currency fluctuations or to
political or economic instability. Investments in non-U.S. securities also may
be subject to withholding or other taxes and may be subject to additional
trading, settlement, custodial, and operational risks. These and other factors
can make investments in the Fund more volatile and potentially less liquid than
other types of investments.
▪Geographic
Concentration Risk. To
the extent the Fund invests a significant portion of its assets in the
securities of companies of a single country or region, it is more likely to be
impacted by events or conditions affecting that country or region.
▪Risks
Related to Investing in Europe.
The economies and markets of European countries are often closely connected and
interdependent, and events in one country in Europe can have an adverse impact
on other European countries. The Fund makes investments in securities of issuers
that are domiciled in, or have significant operations in, member countries of
the European Union (“EU”) that are subject to economic and monetary controls
that can adversely affect the Fund’s investments. The European financial markets
have experienced volatility and adverse trends in recent years and these events
have adversely affected the exchange rate of the euro and may continue to
significantly affect other European countries. Decreasing imports or exports,
changes in governmental or EU regulations on trade, changes in the exchange rate
of the euro, the default or threat of default by an EU member country on its
sovereign debt, and/or an economic recession in an EU member country may have a
significant adverse effect on the economies of EU member countries and their
trading partners, including some or all of the European countries in which the
Fund invests.
▪Risks
Related to Investing in Hong Kong.
Investments in the securities of issuers that trade on an exchange in Hong Kong
subject the Fund to risks specific to China and Hong Kong. Hong Kong may be
subject to considerable degrees of economic, political and social instability.
Hong Kong is a developing market and demonstrates significantly higher
volatility from time to time in comparison to developed markets. Over the past
25 years, the Chinese government has undertaken reform of economic and market
practices and is expanding the sphere of private ownership of property in China.
However, Chinese markets generally continue to experience inefficiency,
volatility and pricing anomalies resulting from governmental influence, a lack
of publicly available information and/or political and social instability.
Internal social unrest or confrontations with other neighboring countries,
including military conflicts in response to such events, may also disrupt
economic development in China and result in a greater risk of currency
fluctuations, currency convertibility, interest rate fluctuations and higher
rates of inflation. Export growth continues to be a major driver of China’s
rapid economic growth. Reduction in spending on Chinese products and services,
institution of tariffs or other trade barriers, or a downturn in any of the
economies of China’s key trading partners may have an adverse impact on the
Chinese
economy.
Further, any attempt by China to tighten its control over Hong Kong’s political,
economic, legal or social policies may result in an adverse effect on Hong
Kong’s markets.
▪Risks
Related to Investing in South Korea.
Investments in South Korean issuers may subject the Fund to legal, regulatory,
political, currency, security, and economic risks that are specific to South
Korea. In addition, economic and political developments of South Korea’s
neighbors may have an adverse effect on the South Korean economy.
▪Risks
Related to Investing in Japan.
The Japanese economy may be subject to considerable degrees of economic,
political and social instability, which could have a negative impact on Japanese
securities. Since the year 2000, Japan’s economic growth rate has remained
relatively low and it may remain low in the future. In addition, Japan is
subject to the risk of natural disasters, such as earthquakes, volcanoes,
typhoons and tsunamis. Additionally, decreasing U.S. imports, new trade
regulations, changes in the U.S. dollar exchange rates, a recession in the
United States or continued increases in foreclosure rates may have an adverse
impact on the economy of Japan. Japan also has few natural resources, and any
fluctuation or shortage in the commodity markets could have a negative impact on
Japanese securities.
▪International
Operations Risk. Investments
in companies with significant business operations outside of the United States
may involve certain risks that may not be present with investments in U.S.
companies. For example, international operations may be subject to risk of loss
due to foreign currency fluctuations; changes in foreign political and economic
environments, regionally, nationally, and locally; challenges of complying with
a wide variety of foreign laws, including corporate governance, operations,
taxes, and litigation; differing lending practices; differences in cultures;
changes in applicable laws and regulations in the United States that affect
international operations; changes in applicable laws and regulations in foreign
jurisdictions; difficulties in managing international operations; and obstacles
to the repatriation of earnings and cash. These and other factors can make an
investment in the Fund more volatile than other types of
investments.
▪Market
Capitalization Risk.
▪Large-Capitalization
Investing.
The securities of large-capitalization companies may be relatively mature
compared to smaller companies and therefore subject to slower growth during
times of economic expansion.
▪Mid-Capitalization
Investing.
The securities of mid-capitalization companies may be more vulnerable to adverse
issuer, market, political, or economic developments than securities of
large-capitalization companies. The securities of mid-capitalization companies
generally trade in lower volumes and are subject to greater and more
unpredictable price changes than large-capitalization stocks or the stock market
as a whole.
▪New
Fund Risk. The
Fund is new with no operating history. As a result, there can be no assurance
that the Fund will grow to or maintain an economically viable size, in which
case it may experience greater tracking error to its Index than it otherwise
would at higher asset levels, or it could ultimately liquidate. The Fund’s
distributor does not maintain a secondary market in Fund shares.
▪Non-Diversification
Risk. Although the Fund intends to invest in a
variety of securities and instruments, the Fund is considered to be
non-diversified, which means that it may invest more of its assets in the
securities of a single issuer or a smaller number of issuers than if it were a
diversified fund. As a result, the Fund may be more exposed to the risks
associated with and developments affecting an individual issuer or a smaller
number of issuers than a fund that invests more widely. This may increase the
Fund’s volatility and cause the performance of a relatively smaller number of
issuers to have a greater impact on the Fund’s performance.
▪Passive
Investment Risk. The
Fund is not actively managed and the Adviser would not sell a security due to
current or projected underperformance of a security, industry or sector, unless
that security is removed from the Index or the selling of shares of that
security is otherwise required upon a reconstitution of the Index in accordance
with the Index methodology. The Fund invests in securities included in the
Index, regardless of their investment merits. The Fund does not take defensive
positions under any market conditions, including conditions that are adverse to
the performance of the Fund.
▪Sector
Risk. To
the extent the Fund invests more heavily in particular sectors of the economy,
its performance will be especially sensitive to developments that significantly
affect those sectors.
▪Industrials
Sector Risk.
The Fund may invest in companies in the industrials sector, and therefore the
performance of the Fund could be negatively impacted by events affecting this
sector. The industrials sector may be affected by changes in the supply of and
demand for products and services, product obsolescence, claims for environmental
damage or product liability and general economic conditions, among other
factors.
▪Information
Technology Sector Risk. The
Fund may invest in companies in the information technology sector, and therefore
the performance of the Fund could be negatively impacted by events affecting
this sector. Market or economic factors impacting information technology
companies and companies that rely heavily on technological advances could have a
significant effect on the value of the Fund’s investments. The value of stocks
of information technology companies and companies that rely heavily on
technology is particularly vulnerable to rapid changes in technology product
cycles, rapid product obsolescence, government regulation and competition, both
domestically and internationally, including competition from foreign competitors
with lower production costs. Stocks of information technology companies and
companies that rely heavily on technology, especially those of smaller,
less-seasoned companies, tend to be more volatile than the overall market.
Information technology companies are heavily dependent on patent and
intellectual property rights, the loss or impairment of which may adversely
affect profitability.
▪Tracking
Error Risk.
As with all index funds, the performance of the Fund and its Index may differ
from each other for a variety of reasons. For example, the Fund incurs operating
expenses and portfolio transaction costs not incurred by the Index. In addition,
the Fund may not be fully invested in the securities of the Index at all times
or may hold securities not included in the Index.
Fund
Performance
Performance information for the Fund is not
included because the Fund did not commence operations prior to the date of this
Prospectus. In the future, performance for the Fund will be
presented in this section. Updated performance information will be available on
the Fund’s website at www.PacerETFs.com
or by calling the Fund toll-free at 1-877-337-0500.
Management
Investment
Adviser
The
Adviser serves as investment adviser to the Fund.
Portfolio
Managers
Bruce
Kavanaugh, Vice President of the Adviser, and Danke Wang, CFA, Head Portfolio
Analyst and Portfolio Manager for the Adviser, are jointly and primarily
responsible for the day-to-day management of the Fund and have served as
portfolio managers since the Fund’s inception.
Buying
and Selling Fund Shares
The
Fund is an ETF. This means that individual Shares of the Fund may only be
purchased and sold in the secondary market through brokers at market prices,
rather than NAV. Because Shares trade at market prices rather than NAV, Shares
may trade at a price greater than NAV (premium) or less than NAV
(discount).
The
Fund generally issues and redeems shares at NAV only in large blocks of shares
known as “Creation Units,” which only institutions or large investors may
purchase or redeem. The Fund generally issues and redeems Creation Units in
exchange for a portfolio of securities (the “Deposit Securities”) and/or a
designated amount of U.S. cash that the Fund specifies each day.
Investors
may incur costs attributable to the difference between the highest price a buyer
is willing to pay to purchase Shares (bid) and the lowest price a seller is
willing to accept for Shares (ask) when buying or selling Shares in the
secondary market (the “bid-ask spread”). Recent information about the Fund,
including its net asset value, market price, premiums and discounts, and bid-ask
spreads is available on the Fund’s website at www.PacerETFs.com.
Tax
Information
Fund
distributions are generally taxable as ordinary income, qualified dividend
income, or capital gains (or a combination), unless your investment is in an IRA
or other tax-advantaged retirement account. Distributions may be taxable upon
withdrawal from tax-deferred accounts.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase the Fund through a broker or other financial intermediary (such as
a bank), the Adviser, and their related companies may pay the intermediary for
activities related to the marketing and promotion of the Fund. These payments
may create a conflict of interest by influencing the broker-dealer or other
intermediary and your sales person to recommend the Fund over another
investment. Ask your sales person or visit your financial intermediary’s website
for more information.
ADDITIONAL
INFORMATION ABOUT THE INDEXES
Each
Index is calculated by a third party calculation agent that is not affiliated
with the Funds, IDG, the Adviser, or the Funds’ distributor. Each such
calculation agent shall have no liability for any errors or omissions in
calculating any Index.
Each
Index is calculated by the Index Provider, an affiliate of the Adviser, and was
created and is sponsored by the Adviser or one of its affiliates.
At
the time of each quarterly rebalance and reconstitution, constituents of the
applicable Index must meet the following Investibility
Requirements:
•be
a publicly-traded equity security;
•be
listed on a major stock exchange;
•have
a market capitalization of at least US$1 billion
•have
a 3-month average daily value traded greater than or equal to US$2 million;
and
•be
the primary listing security.
In
addition, a company cannot be included in the applicable Index if the company is
currently involved with bankruptcy proceedings; has entered into a materially
binding/definitive agreement which would otherwise disqualify the security from
Index inclusion; or is listed on exchanges based in India, China (A-shares
only), Saudi Arabia, or Russia.
The
list of excluded countries may be modified by the Index Provider from time to
time with a primary goal of avoiding countries with excessive and/or onerous
capital controls, trading constraints, regulatory hurdles, or other operational
difficulties that would prevent an investor from fully replicating the index on
their own.
ADDITIONAL
INFORMATION ABOUT THE FUNDS
Additional
Information About Each Fund
Investment
Objective.
Each Fund’s investment objective has been adopted as a non-fundamental
investment policy and may be changed without a vote of shareholders upon written
notice to shareholders.
Each
of the Pacer Data and Digital Revolution ETF (the “Digital Revolution Fund”) and
the Pacer Industrials and Logistics ETF (the “Industrials and Logistics Fund”)
will generally use a “replication” strategy to achieve its investment objective,
meaning it will invest in all of the component securities of the applicable
Index in the same approximate proportion as in such Index, but may, when the
Adviser believes it is in the best interests of such Fund, use a “representative
sampling” strategy, meaning it may invest in a sample of the securities in the
applicable Index whose risk, return, and other characteristics closely resemble
the risk, return, and other characteristics of the applicable Index as a whole
(e.g.,
when replicating the Index involves practical difficulties or substantial costs,
an Index constituent becomes temporarily illiquid, unavailable or less liquid,
or as a result of legal restrictions or limitations that apply to a Fund but not
to its Index).
Additional
Information about the Principal Risks of Investing in the Funds
This
section provides additional information regarding the principal risks described
under “Principal Risks of Investing in the Fund” in each of the Fund Summaries.
The factors below apply to both Funds unless otherwise indicated. Each of the
factors below could have a negative impact on the applicable Fund’s performance
and trading prices. As in each Fund Summary above, the principal risks below are
presented in alphabetical order to facilitate finding particular risks and
comparing them with other funds. Each risk described below is considered a
“principal risk” of investing in the applicable Fund, regardless of the order in
which it appears.
Associated
Risks of Data and Digital Revolution Companies (Digital
Revolution Fund only)
Data
and digital revolution companies include companies that develop and provide
goods and services related to the transmission of data and communications.
Transmission and communications services companies are subject to extensive
government regulation. The costs of complying with governmental regulations,
delays or failure to receive required regulatory approvals, or the enactment of
new adverse regulatory requirements may adversely affect the business of such
companies. Such companies can are also be subject to intense competition and
thus affected by mergers or consolidations by and among customers, competition
with alternative technologies such as wireless communications (including with 5G
and
other technologies), product compatibility, consumer preferences, rapid product
obsolescence, and research and development of new products. Technological
innovations may make the products and services of such companies obsolete. As a
result, the value of the Fund’s shares may rise and fall more than the value of
shares of a fund that invests in securities of companies in a broader range of
industries. In addition, at times, the data and digital revolution companies may
be out of favor and underperform other industries or groups of industries.
Associated
Risks of Industrials and Logistics Companies (Industrials
and Logistics Fund only)
Industrials
and Logistics companies support the global supply chain. These companies may be
adversely affected by a downturn in economic conditions that can result in
decreased demand for shipping, ports, trade routes, and freight. Such companies
may also be significantly affected by changes in fuel prices, which may be very
volatile, the imposition of tariffs or trade wars, changes in labor relations or
availability, labor strikes, insurance costs, commodities prices in general,
international politics and conflicts, changes in transportation patterns,
changes to shipping and air freight routes, weather patterns and events,
including hurricane activity, road conditions, pandemic diseases, the
congestion, blockage or shutdown of key routes, ports, and canals, commodity
prices, taxes, tariffs, trade wars, imposition of emissions standards and other
environment-related rules and regulations, domestic or international politics
and conflicts, including war or threat of war, computer and/or software
malfunction, logistics interference, piracy, cyber attacks and terrorism.
Industrials and Logistics companies may also be highly dependent on aircraft,
ships, trucks, heavy machinery, technology, or related equipment from a small
number of suppliers, and consequently, issues affecting the availability,
reliability, safety, or longevity of such equipment may have a significant
effect on the operations and profitability of such companies. In addition,
regulatory changes and competition from foreign companies subject to more
favorable government regulation may affect the success of these
companies.
Calculation
Methodology Risk
The
Fund’s Index relies directly or indirectly on various sources of information to
assess the criteria of issuers included in the Index, including information that
may be based on assumptions and estimates. Neither the Fund, the Index Provider,
or the Adviser can offer assurances that the Index’s calculation methodology or
sources of information will provide an accurate assessment of included issuers
or a correct valuation of securities, nor can they guarantee the availability or
timeliness of the production of the Index.
Currency
Exchange Rate Risk
Changes
in currency exchange rates and the relative value of non-U.S. currencies will
affect the value of the Fund’s investments and the value of your Fund Shares.
Because the Fund’s NAV is determined on the basis of U.S. dollars, the U.S.
dollar value of your investment in the Fund may go down if the value of the
local currency of the non-U.S. markets in which the Fund invests depreciates
against the U.S. dollar. This is true even if the local currency value of
securities in the Fund’s holdings goes up. Conversely, the dollar value of your
investment in the Fund may go up if the value of the local currency appreciates
against the U.S. dollar. The value of the U.S. dollar measured against other
currencies is influenced by a variety of factors. These factors include:
national debt levels and trade deficits, changes in balances of payments and
trade, domestic and foreign interest and inflation rates, global or regional
political, economic or financial events, monetary policies of governments,
actual or potential government intervention, and global energy prices. Political
instability, the possibility of government intervention and restrictive or
opaque business and investment policies may also reduce the value of a country’s
currency. Government monetary policies and the buying or selling of currency by
a country’s government may also influence exchange rates. Currency exchange
rates can be very volatile and can change quickly and unpredictably. As a
result, the value of an investment in the Fund may change quickly and without
warning, and you may lose money.
Equity
Market Risk
Equity
securities may experience sudden, unpredictable drops in value or long periods
of decline in value. This may occur because of factors that affect securities
markets generally or factors affecting specific industries, sectors or
companies. Common stocks are generally exposed to greater risk than other types
of securities, such as preferred stock and debt obligations, because common
stockholders generally have inferior rights to receive payment from issuers.
Common stocks are susceptible to general stock market fluctuations and to
volatile increases and decreases in value as market confidence in and
perceptions of their issuers change. These investor perceptions are based on
various and unpredictable factors including: expectations regarding government,
economic, monetary and fiscal policies; inflation and interest rates;
economic
expansion or contraction; local, regional or global events such as acts of
terrorism or war, including Russia’s invasion of Ukraine; and global or regional
political, economic, public health, and banking crises.
Beginning
in the first quarter of 2020, financial markets in the United States and around
the world experienced extreme and in many cases unprecedented volatility and
severe losses due to the global pandemic caused by COVID-19, a novel
coronavirus. The pandemic has resulted in a wide range of social and economic
disruptions, including closed borders, voluntary or compelled quarantines of
large populations, stressed healthcare systems, reduced or prohibited domestic
or international travel, supply chain disruptions, and so-called “stay-at-home”
orders throughout much of the United States and many other countries. The
fall-out from these disruptions has included the rapid closure of businesses
deemed “non-essential” by federal, state, or local governments and rapidly
increasing unemployment, as well as greatly reduced liquidity for certain
instruments at times. Some sectors of the economy and individual issuers have
experienced particularly large losses. Such disruptions may continue for an
extended period of time or reoccur in the future to a similar or greater extent.
In response, the U.S. government and the Federal Reserve have taken
extraordinary actions to support the domestic economy and financial markets,
resulting in very low interest rates and in some cases negative yields. It is
unknown how long circumstances related to the pandemic will persist, whether
they will reoccur in the future, whether efforts to support the economy and
financial markets will be successful, and what additional implications may
follow from the pandemic. The impact of these events and other epidemics or
pandemics in the future could adversely affect Fund performance.
ETF
Risks
The
Fund is an ETF and, as a result of an ETF’s structure, is exposed to the
following risks:
•APs,
Market Makers, and Liquidity Providers Concentration Risk. The
Fund may have a limited number of financial institutions that may act as APs. In
addition, there may be a limited number of market makers and/or liquidity
providers in the marketplace. To the extent either of the following events
occur, Shares of a Fund may trade at a material discount to NAV and possibly
face delisting: (i) APs exit the business or otherwise become unable to
process creation and/or redemption orders and no other APs step forward to
perform these services, or (ii) market makers and/or liquidity providers
exit the business or significantly reduce their business activities and no other
entities step forward to perform their functions.
•Cash
Redemption Risk.
To the extent the Fund’s investment strategy requires it to redeem Shares for
cash or to otherwise include cash as part of its redemption proceeds, the Fund
may be required to sell or unwind portfolio investments to obtain the cash
needed to distribute redemption proceeds. This may cause the Fund to recognize a
capital gain that it might not have recognized if it had made a redemption
in-kind. As a result, the Fund may pay out higher annual capital gain
distributions than if the in-kind redemption process was used.
•Costs
of Buying or Selling Shares. Investors
buying or selling Shares in the secondary market will pay brokerage commissions
or other charges imposed by brokers, as determined by that broker. Brokerage
commissions are often a fixed amount and may be a significant proportional cost
for investors seeking to buy or sell relatively small amounts of Shares. In
addition, secondary market investors will also incur the cost of the difference
between the price at which an investor is willing to buy Shares (the “bid”
price) and the price at which an investor is willing to sell Shares (the “ask”
price). This difference in bid and ask prices is often referred to as the
“spread” or “bid/ask spread.” The bid/ask spread varies over time for Shares
based on trading volume and market liquidity, and is generally lower if Shares
have more trading volume and market liquidity and higher if Shares have little
trading volume and market liquidity. Further, a relatively small investor base
in the Fund, asset swings in the Fund and/or increased market volatility may
cause increased bid/ask spreads. Due to the costs of buying or selling Shares,
including bid/ask spreads, frequent trading of Shares may significantly reduce
investment results and an investment in Shares may not be advisable for
investors who anticipate regularly making small investments.
•Shares
of a Fund May Trade at Prices Other Than NAV.
As with all ETFs, Shares may be bought and sold in the secondary market at
market prices. Although it is expected that the market price of Shares will
approximate the Fund’s NAV, there may be times when the market price of Shares
is more than the NAV intra-day (premium) or less than the NAV intra-day
(discount) due to supply and demand of Shares or during periods of market
volatility. This risk is heightened in times of market volatility, periods of
steep market declines, and periods when there is limited trading activity for
Shares in the secondary market, in which case such premiums or discounts may be
significant.
•Trading.
Although Shares are listed for trading on its applicable Exchange and may be
listed or traded on U.S. and non-U.S. stock exchanges other than its applicable
Exchange, there can be no assurance that an active trading market for such
Shares will develop or be maintained. Trading in Shares may be halted due to
market conditions or for reasons that, in the view of its applicable Exchange,
make trading in Shares inadvisable. In addition, trading in Shares on its
applicable Exchange is subject to trading halts caused by extraordinary market
volatility pursuant to each Exchange’s “circuit breaker” rules, which
temporarily halt trading on such Exchange when a decline in the S&P 500
Index during a single day reaches certain thresholds (e.g.,
7%, 13%, and 20%). Additional rules applicable to each Exchange may halt trading
in Shares when extraordinary volatility causes sudden, significant swings in the
market price of Shares. There can be no assurance that Shares will trade with
any volume, or at all, on any stock exchange. In stressed market conditions, the
liquidity of shares of the Fund may begin to mirror the liquidity of the Fund’s
underlying portfolio holdings, which can be significantly less liquid than
Shares, and this could lead to differences between the market price of the
shares of the Fund and the underlying value of those Shares.
Foreign
Securities Risk
Investments
in non-U.S. securities involve certain risks that may not be present with
investments in U.S. securities. For example, investments in non-U.S. securities
may be subject to risk of loss due to foreign currency fluctuations or to
political or economic instability. There may be less information publicly
available about a non-U.S. issuer than a U.S. issuer. Non-U.S. issuers may be
subject to different accounting, auditing, financial reporting and investor
protection standards than U.S. issuers. Investments in non-U.S. securities may
be subject to withholding or other taxes and may be subject to additional
trading, settlement, custodial, and operational risks. With respect to certain
countries, there is the possibility of government intervention and expropriation
or nationalization of assets. Because legal systems differ, there is also the
possibility that it will be difficult to obtain or enforce legal judgments in
certain countries. Since foreign exchanges may be open on days when the Fund
does not price its shares, the value of the securities in the Fund’s portfolio
may change on days when shareholders will not be able to purchase or sell the
Fund’s Shares. Conversely, Fund Shares may trade on days when foreign exchanges
are close. Each of these factors can make investments in the Fund more volatile
and potentially less liquid than other types of investments.
Geographic
Concentration Risk
The
Fund is subject to geographic concentration risk, which is the chance that world
events—such as political upheaval, financial troubles, or natural disasters—will
adversely affect the value of securities issued by companies in foreign
countries or regions. Because the Fund may invest a large portion of its assets
in securities of companies located in any one country or region, the Fund’s
performance may be hurt disproportionately by the poor performance of its
investments in that area.
•Risks
Related to Investing in Europe.
The economies and markets of European countries are often closely connected and
interdependent, and events in one country in Europe can have an adverse impact
on other European countries. The Fund makes investments in securities of issuers
that are domiciled in, or have significant operations in, member countries of
the European Union (“EU”) that are subject to economic and monetary controls
that can adversely affect the Fund’s investments. The European financial markets
have experienced volatility and adverse trends in recent years and these events
have adversely affected the exchange rate of the euro and may continue to
significantly affect other European countries. Decreasing imports or exports,
changes in governmental or EU regulations on trade, changes in the exchange rate
of the euro, the default or threat of default by an EU member country on its
sovereign debt, and/or an economic recession in an EU member country may have a
significant adverse effect on the economies of EU member countries and their
trading partners, including some or all of the European countries in which the
Fund invests.
The
UK formally exited from the EU on January 31, 2020 (known as “Brexit”), and
effective December 31, 2020, the UK ended a transition period during which it
continued to abide by the EU’s rules and the UK’s trade relationships with the
EU were generally unchanged. Following this transition period, the impact on the
UK and European economies and the broader global economy could be significant,
resulting in negative impacts, such as increased volatility and illiquidity, and
potentially lower economic growth of markets in the UK, Europe and globally,
which may adversely affect the value of the Fund’s investments.
•Risks
Related to Investing in Hong Kong (Industrials and Logistics Fund
only).
Investments in the securities of issuers that trade on an exchange in Hong Kong
subject the Fund to risks specific to China and Hong Kong. Hong Kong may
be
subject to considerable degrees of economic, political and social instability.
Hong Kong is a developing market and demonstrates significantly higher
volatility from time to time in comparison to developed markets. Over the past
25 years, the Chinese government has undertaken reform of economic and market
practices and is expanding the sphere of private ownership of property in China.
However, Chinese markets generally continue to experience inefficiency,
volatility and pricing anomalies resulting from governmental influence, a lack
of publicly available information and/or political and social instability.
Internal social unrest or confrontations with other neighboring countries,
including military conflicts in response to such events, may also disrupt
economic development in China and result in a greater risk of currency
fluctuations, currency convertibility, interest rate fluctuations and higher
rates of inflation. Export growth continues to be a major driver of China’s
rapid economic growth. Reduction in spending on Chinese products and services,
institution of tariffs or other trade barriers, or a downturn in any of the
economies of China’s key trading partners may have an adverse impact on the
Chinese economy. Further, any attempt by China to tighten its control over Hong
Kong’s political, economic, legal or social policies may result in an adverse
effect on Hong Kong’s markets.
•Risks
Related to Investing in South Korea (Industrials and Logistics Fund
only).
Investments in South Korean issuers may subject the Fund to legal, regulatory,
political, currency, security, and economic risks that are specific to South
Korea. In addition, economic and political developments of South Korea’s
neighbors may have an adverse effect on the South Korean economy.
•Risks
Related to Investing in Japan (Industrials and Logistics Fund only).
The Japanese economy may be subject to considerable degrees of economic,
political and social instability, which could have a negative impact on Japanese
securities. Since the year 2000, Japan’s economic growth rate has remained
relatively low and it may remain low in the future. In addition, Japan is
subject to the risk of natural disasters, such as earthquakes, volcanoes,
typhoons and tsunamis. Additionally, decreasing U.S. imports, new trade
regulations, changes in the U.S. dollar exchange rates, a recession in the
United States or continued increases in foreclosure rates may have an adverse
impact on the economy of Japan. Japan also has few natural resources, and any
fluctuation or shortage in the commodity markets could have a negative impact on
Japanese securities.
International
Operations Risk
Investments
in companies with significant business operations outside of the United States
may involve certain risks that may not be present with investments in U.S.
companies. For example, international operations may be subject to risk of loss
due to foreign currency fluctuations; changes in foreign political and economic
environments, regionally, nationally, and locally; challenges of complying with
a wide variety of foreign laws, including corporate governance, operations,
taxes, and litigation; differing lending practices; differences in cultures;
changes in applicable laws and regulations in the United States that affect
international operations; changes in applicable laws and regulations in foreign
jurisdictions; difficulties in managing international operations; and obstacles
to the repatriation of earnings and cash. These and other factors can make an
investment in the Fund more volatile than other types of
investments.
Large-Capitalization
Investing
Risk
The
securities of large-capitalization companies may be relatively mature compared
to smaller companies and therefore subject to slower growth during times of
economic expansion. Large-capitalization companies may also be unable to respond
quickly to new competitive challenges, such as changes in technology and
consumer tastes.
Mid-Capitalization
Investing Risk
The
securities of mid-capitalization companies may be more vulnerable to adverse
issuer, market, political, public health, cyber, or economic developments than
securities of large-capitalization companies. The securities of
mid-capitalization companies generally trade in lower volumes and are subject to
greater and more unpredictable price changes than large capitalization stocks or
the stock market as a whole. Some medium capitalization companies have limited
product lines, markets, financial resources, and management personnel and tend
to concentrate on fewer geographical markets relative to large-capitalization
companies.
New
Fund Risk
The
Fund has not yet commenced investment operations. As a result, prospective
investors have no track record or history on which to base their investment
decisions. An investment in a Fund may therefore involve greater uncertainty
than an investment in a fund with an established record of performance. In
addition, there can be no assurance that a Fund will
grow
to or maintain an economically viable size, in which case it may experience
greater tracking error to its Index than it otherwise would at higher asset
levels, or it could ultimately liquidate. The Fund’s distributor does not
maintain an active market in Fund Shares.
Non-Diversification
Risk
Although
the Fund intends to invest in a variety of securities and instruments, the Fund
is considered to be non- diversified. This means that the Fund may invest more
of its assets in the securities of a single issuer or a smaller number of
issuers than if it was a diversified funds. As a result, the Fund may be more
exposed to the risks associated with and developments affecting an individual
issuer or a smaller number of issuers than a fund that invests more widely. This
may increase the Fund’s volatility and cause the performance of a relatively
smaller number of issuers to have a greater impact on that Fund’s
performance.
Passive
Investment Risk
The
Fund is not actively managed and the Adviser would not sell a security due to
current or projected underperformance of a security, industry or sector, unless
that security is removed from the Index or the selling of shares of that
security is otherwise required upon a reconstitution of the Index in accordance
with the Index methodology. Other than in response to a trigger if set forth in
the Fund’s applicable Index methodology, the Fund invests in securities included
in, or representative of securities included in the Index regardless of their
investment merits. The Fund does not take defensive positions under any market
conditions, including conditions that are adverse to the performance of the
Fund. The returns from the types of securities in which the Fund invests may
underperform returns from the various general securities markets or different
asset classes. This may cause the Fund to underperform other investment vehicles
that invest in different asset classes. Different types of securities (for
example, large-, mid- and small-capitalization stocks) tend to go through cycles
of doing better – or worse – than the general securities markets. In the past,
these periods have lasted for as long as several years.
Sector
Risk
To
the extent the Fund invests more heavily in particular sectors of the economy,
its performance will be especially sensitive to developments that significantly
affect those sectors.
•Industrial
Sector Risk. The
industrial sector can be significantly affected by, among other things,
worldwide economic growth, supply and demand for specific products and services,
rapid technological developments, international political and economic
developments, environmental issues, tariffs and trade barriers, and tax and
governmental regulatory policies. As the demand for, or prices of, industrials
increase, the value of the Fund’s investments generally would be expected to
also increase. Conversely, declines in the demand for, or prices of, industrials
generally would be expected to contribute to declines in the value of such
securities. Such declines may occur quickly and without warning and may
negatively impact the value of the Fund and your investment.
•Information
Technology Sector Risk. The
Fund may invest in companies in the information technology sector, and therefore
the performance of the Fund could be negatively impacted by events affecting
this sector. Market or economic factors impacting information technology
companies and companies that rely heavily on technological advances could have a
significant effect on the value of the Fund’s investments. The value of stocks
of information technology companies and companies that rely heavily on
technology is particularly vulnerable to rapid changes in technology product
cycles, rapid product obsolescence, government regulation and competition, both
domestically and internationally, including competition from foreign competitors
with lower production costs. Stocks of information technology companies and
companies that rely heavily on technology, especially those of smaller,
less-seasoned companies, tend to be more volatile than the overall market.
Information technology companies are heavily dependent on patent and
intellectual property rights, the loss or impairment of which may adversely
affect profitability. Additionally, companies in the information technology
sector may face dramatic and often unpredictable changes in growth rates and
competition for the services of qualified personnel.
Tracking
Error Risk
As
with all index funds, the performance of the Fund and its Index may vary
somewhat for a variety of reasons. For example, the Fund incurs operating
expenses and portfolio transaction costs not incurred by its Index. In addition,
the Fund may not be fully invested in the securities of its Index at all times
or may hold securities not included in its Index. The use of sampling techniques
may affect the Fund’s ability to achieve close correlation with its Index. The
Fund may
use
a representative sampling strategy to achieve its investment objective, if the
Adviser believes it is in the best interest of the Fund, which generally can be
expected to produce a greater non-correlation risk.
ADDITIONAL
NON-PRINCIPAL RISK INFORMATION
Absence
of a Prior Active Market. Although
the Fund’s Shares are approved for listing on the a national securities
exchange, there can be no assurance that an active trading market will develop
and be maintained for Fund Shares. There can be no assurance that a Fund will
grow to or maintain an economically viable size, in which case such Fund may
experience greater tracking error to its Index than it otherwise would at higher
asset levels or the Fund may ultimately liquidate.
Liquidity
Risk. The
Fund may hold certain investments that may be subject to restrictions on resale,
trade over-the-counter or in limited volume, or lack an active trading market.
Accordingly, the Fund may not be able to sell or close out of such investments
at favorable times or prices (or at all), or at prices approximating those at
which the Fund currently values them. Illiquid securities may trade at a
discount from comparable, more liquid investments and may be subject to wide
fluctuations in market value.
Risk
of Investing in the United States. Certain
changes in the U.S. economy, such as when the U.S. economy weakens or when its
financial markets decline, may have an adverse effect on the securities to which
the Funds have exposure. A decrease in imports or exports, changes in trade
regulations, and/or an economic recession in the United States may have a
material adverse effect on the U.S. economy and the securities listed on U.S.
exchanges. Proposed and adopted policy and legislative changes in the United
States are changing many aspects of financial and other regulation and may have
a significant effect on the U.S. markets generally, as well as on the value of
certain securities. In addition, a continued rise in the U.S. public debt level
or the imposition of U.S. austerity measures may adversely affect U.S. economic
growth and the securities to which the Fund has exposure. The United States has
developed increasingly strained relations with a number of foreign countries. If
relations with certain countries continue to worsen, it could adversely affect
U.S. issuers as well as non-U.S. issuers that rely on the United States for
trade. The United States has also experienced increased internal unrest and
discord. If this trend were to continue, it may have an adverse impact on the
U.S. economy and the issuers in which the Fund invests.
Securities
Lending
Risk.
There
are certain risks associated with securities lending, including the risk that
the borrower may fail to return the securities on a timely basis or even the
loss of rights in the collateral deposited by the borrower, if the borrower
should fail financially. As a result, a Fund may lose money. A Fund could also
lose money in the event of a decline in the value of collateral provided for
loaned securities or a decline in the value of any investments made with cash
collateral. These events could also trigger adverse tax consequences for a
Fund.
PORTFOLIO
HOLDINGS INFORMATION
Information
about each Fund’s daily portfolio holdings is available at www.PacerETFs.com. A
summarized description of each Fund’s policies and procedures with respect to
the disclosure of each Fund’s portfolio holdings is available in the Funds’
Statement of Additional Information (“SAI”).
MANAGEMENT
The
Funds are series of Pacer Funds Trust (the “Trust”), a Delaware statutory trust,
which is overseen by a board of trustees.
Investment
Adviser
The
Adviser has overall responsibility for the general management and administration
of the Trust and each of its separate investment portfolios. The Adviser is a
registered investment adviser with offices located at 500 Chesterfield Parkway,
Malvern, Pennsylvania 19355. The Adviser has managed ETFs since 2015. The
Adviser also arranges for transfer agency, custody, fund administration,
securities lending, and all other related services necessary for each Fund to
operate. For its services, the Adviser receives a fee from each Fund, computed
daily and paid monthly, based on a percentage of each Fund’s average daily net
assets, as shown in the following table:
|
|
|
|
|
|
Name
of Fund |
Management
Fee |
Pacer
Data and Digital Revolution ETF |
0.60% |
Pacer
Industrials and Logistics ETF |
0.60% |
Under
the Investment Advisory Agreement between the Adviser and the Trust, on behalf
of the Funds (the “Investment Advisory Agreement”), the Adviser has agreed to
pay all expenses of each Fund, except for: the fee paid to the Adviser pursuant
to the Investment Advisory Agreement, interest charges on any borrowings, taxes,
brokerage commissions and other expenses incurred in placing orders for the
purchase and sale of securities and other investment instruments, acquired fund
fees and expenses, accrued deferred tax liability, extraordinary expenses,
distribution (12b-1) fees and expenses.
The
basis for the Board of Trustees’ approval of each Fund’s Investment Advisory
Agreement will be available in the Funds’ first Annual or Semi-Annual Report to
Shareholders.
Portfolio
Managers
Each
Fund employs a rules-based, passive investment strategy. The Adviser uses a
committee approach to managing the Funds. The Funds’ portfolio management team
consists of Bruce Kavanaugh and Danke Wang, CFA, who are jointly and primarily
responsible for the day-to-day management of the Funds’ portfolios.
Mr.
Kavanaugh has been Vice President of the Adviser since it began operations in
2004. He has been a portfolio manager with the Adviser since 2013. Mr. Kavanaugh
has more than 25 years of experience in financial services.
Mr.
Wang, Head Portfolio Analyst and Portfolio Manager, joined the Adviser in 2014.
He served as a Senior Portfolio Analyst of the Adviser from 2014 to 2022 and
became Head Portfolio Analyst and a portfolio manager in 2022. Mr.
Wang obtained an MS in Finance from Villanova University and holds the Chartered
Financial Analyst designation.
The
SAI provides additional information about each Portfolio Manager’s compensation
structure, other accounts managed by the Portfolio Managers, and the Portfolio
Managers’ ownership of Shares of each Fund.
ADDITIONAL
INFORMATION ON BUYING AND SELLING FUND SHARES
Most
investors will buy and sell Shares of the Funds through brokers. Shares of each
Fund trade on the Exchange and elsewhere during the trading day and can be
bought and sold throughout the trading day like other shares of publicly traded
securities.
When
buying or selling Shares through a broker, most investors will incur customary
brokerage commissions and charges. Shares of each Fund trade under the trading
symbol listed on the cover of this Prospectus. Only authorized participants
(“Authorized Participants” or “APs”) who have entered into agreements with the
Funds’ distributor may acquire Shares directly from a Fund, and only APs may
tender their Shares for redemption directly to each Fund, at NAV in Creation
Units. Once created, Shares trade in the secondary market in amounts less than a
Creation Unit.
Share
Trading Prices
Transactions
in each Fund’s Shares will be priced at NAV only if you purchase Shares directly
from each Fund in Creation Units. As with other types of securities, the trading
prices of Shares in the secondary market can be affected by market forces such
as supply and demand, economic conditions and other factors. The price you pay
or receive when you buy or sell your Shares in the secondary market may be more
or less than the NAV of such Shares.
Determination
of Net Asset Value
The
NAV of each Fund’s Shares is calculated each day the New York Stock Exchange
(“NYSE”) is open for trading as of the close of regular trading on the NYSE,
generally 4:00 p.m. Eastern Time (the “NAV Calculation Time”). If the NYSE
closes before 4:00 p.m. Eastern Time, as it occasionally does, the NAV
Calculation Time will be the time the NYSE closes. In addition, any U.S.
fixed-income assets may be valued as of the announced closing time of trading in
fixed income instruments on any day that the Securities Industry and Financial
Markets Association announces an early closing time. Each Fund’s NAV per share
is calculated by dividing the Fund’s net assets by the number of Fund Shares
outstanding.
In
calculating its NAV, each Fund generally values its assets on the basis of
market quotations, last sale prices, or estimates of value furnished by a
pricing service or brokers who make markets in such instruments. Debt
obligations with maturities of 60 days or less are valued at amortized
cost.
Fair
Value Pricing
The
Board has adopted procedures and methodologies to fair value Fund securities
whose market prices are not “readily available” or are deemed to be unreliable.
For example, such circumstances may arise when: (i) a security has been
de-listed or has had its trading halted or suspended; (ii) a security’s primary
pricing source is unable or unwilling to provide a price; (iii) a security’s
primary trading market is closed during regular market hours; or (iv) a
security’s value is materially affected by events occurring after the close of
the security’s primary trading market. Generally, when fair valuing a security,
the Adviser will take into account all reasonably available information that may
be relevant to a particular valuation including, but not limited to, fundamental
analytical data regarding the issuer, information relating to the issuer’s
business, recent trades or offers of the security, general and/or specific
market conditions and the specific facts giving rise to the need to fair value
the security. The Adviser makes fair value determinations in good faith and in
accordance with the fair value methodologies included in the Board-adopted
valuation procedures. Due to the subjective and variable nature of fair value
pricing, there can be no assurance that the Adviser will be able to obtain the
fair value assigned to the security upon the sale of such security.
Dividends
and Distributions
Each
Fund expects to pay out dividends, if any, on an quarterly basis. Nonetheless,
each Fund may make more frequent dividend payments. Each Fund expects to
distribute its net realized capital gains to investors annually. Each Fund
occasionally may be required to make supplemental distributions at some other
time during the year. Distributions in cash may be reinvested automatically in
additional whole Shares only if the broker through whom you purchased Shares
makes such option available. Your broker is responsible for distributing the
income and capital gain distributions to you.
Book
Entry
Shares
of each Fund are held in book-entry form, which means that no stock certificates
are issued. The Depository Trust Company (“DTC”) or its nominee is the record
owner of all outstanding Shares of each Fund.
Investors
owning Shares of each Fund are beneficial owners as shown on the records of DTC
or its participants. DTC serves as the securities depository for all Shares of
each Fund. Participants include DTC, securities brokers and dealers, banks,
trust companies, clearing corporations, and other institutions that directly or
indirectly maintain a custodial relationship with DTC. As a beneficial owner of
Shares, you are not entitled to receive physical delivery of stock certificates
or to have Shares registered in your name, and you are not considered a
registered owner of Shares. Therefore, to exercise any right as an owner of
Shares, you must rely upon the procedures of DTC and its participants. These
procedures are the same as those that apply to any securities that you hold in
book-entry or “street name” form. Your broker will provide you with account
statements, confirmations of your purchases and sales, and tax
information.
Delivery
of Shareholder Documents – Householding
Householding
is an option available to certain investors of each Fund. Householding is a
method of delivery, based on the preference of the individual investor, in which
a single copy of certain shareholder documents can be delivered to investors who
share the same address, even if their accounts are registered under different
names. Householding for each Fund is available through certain broker-dealers.
If you are interested in enrolling in householding and receiving a single copy
of prospectuses and other shareholder documents, please contact your
broker-dealer. If you are currently enrolled in householding and wish to change
your householding status, please contact your broker-dealer.
Frequent
Purchases and Redemptions of Fund Shares
Each
Fund imposes no restrictions on the frequency of purchases and redemptions of
Fund Shares. In determining not to impose such restrictions, the Board evaluated
the risks of market timing activities by Fund shareholders. Purchases and
redemptions by APs, who are the only parties that may purchase or redeem Shares
directly with a Fund, are an essential part of the ETF process and help keep
Fund share trading prices in line with NAV. As such, each Fund accommodates
frequent purchases and redemptions by APs. However, the Board has also
determined that frequent purchases and redemptions for cash may increase
tracking error and portfolio transaction costs and may lead to the realization
of capital gains. To minimize these potential consequences of frequent purchases
and redemptions, each Fund imposes transaction
fees
on purchases and redemptions of Creation Units to cover the custodial and other
costs incurred by the Fund in effective trades. In addition, each Fund and the
Adviser reserves the right to reject any purchase order at any
time.
Investments
by Registered Investment Companies
Section
12(d)(1) of the 1940 Act restricts investments by registered investment
companies in the securities of other investment companies, including Shares of
each Fund. Registered investment companies are permitted to invest in each Fund
beyond the limits set forth in section 12(d)(1), subject to certain terms and
conditions set forth in an SEC exemptive order issued to the Trust, including
that such investment companies enter into an agreement with the applicable
Fund(s).
ADDITIONAL
TAX INFORMATION
The
following discussion is a summary of some important U.S. federal income tax
considerations generally applicable to investments in the Funds. Your investment
in the Funds may have other tax implications. Please consult your tax advisor
about the tax consequences of an investment in Shares, including the possible
application of foreign, state, and local tax laws.
The
Funds intend to qualify each year for treatment as a registered investment
company (“RIC”). If it meets certain minimum distribution requirements, a RIC is
not subject to tax at the fund level on income and gains from investments that
are timely distributed to shareholders. However, a Fund’s failure to qualify as
a RIC or to meet minimum distribution requirements would result (if certain
relief provisions were not available) in fund-level taxation and, consequently,
a reduction in income available for distribution to shareholders.
Unless
you are a tax-exempt entity or your investment in Fund Shares is made through a
tax advantaged retirement account, such as an IRA, you need to be aware of the
possible tax consequences when:
•A
Fund makes distributions;
•You
sell Fund Shares; and
•You
purchase or redeem Creation Units (institutional investors only).
Taxes
on Distributions
Tax
reform legislation commonly known as the Tax Cuts and Jobs Act (the “Tax Act”)
was enacted on December 22, 2017. The Tax Act made significant changes to the
U.S. federal income tax rules for individuals and corporations, generally
effective for taxable years beginning after December 31, 2017. The application
of certain provisions of the Tax Act is uncertain, and the changes in the act
may have indirect effects on the Funds, its investments and its shareholders
that cannot be predicted. For federal income tax purposes, distributions of
investment income are generally taxable as ordinary income or “qualified
dividend income.” Taxes on distributions of capital gains (if any) depend on how
long a Fund owned the assets that generated them, rather than how long a
shareholder has owned his or her Fund Shares. Sales of assets held by a Fund for
more than one year generally result in long-term capital gains and losses, and
sales of assets held by a Fund for one year or less generally result in
short-term capital gains and losses. Distributions of a Fund’s net capital gain
(the excess of net long-term capital gains over net short-term capital losses)
that are properly reported by the Fund as capital gain dividends (“Capital Gain
Dividends”) are taxable as long-term capital gains. For noncorporate
shareholders, long-term capital gains are generally subject to tax at reduced
rates and currently set at a maximum rate of 20%. Distributions of short-term
capital gain are generally taxable as ordinary income. Distributions of
investment income reported by the Fund as derived from “qualified dividend
income” will be taxed at long term capital gain rates for non-corporate
shareholders.
U.S.
individuals with income exceeding specified thresholds are subject to a 3.8%
Medicare contribution tax on all or a portion of their “net investment income,”
which includes interest, dividends, and certain capital gains (generally
including capital gain distributions and capital gains realized on the sale or
exchange of Fund Shares).
In
general, your distributions are subject to federal income tax for the year in
which they are paid. Certain distributions paid in January, however, may be
treated as paid on December 31 of the prior year. Distributions are
generally taxable even if they are paid from income or gains earned by the Funds
before your investment (and thus were included in the Fund Shares’ NAV when you
purchased your Fund Shares).
A
Fund may include a payment of cash in addition to, or in place of, the delivery
of a basket of securities upon the redemption of Creation Units. The Funds may
sell portfolio securities to obtain the cash needed to distribute redemption
proceeds. This may cause the Funds to recognize investment income and/or capital
gains or losses that it might not have recognized if it had completely satisfied
the redemption in-kind. As a result, the Funds may be less tax efficient if it
includes such a cash payment in the proceeds paid upon the redemption of
Creation Units.
Nonresident
aliens, foreign corporations and other foreign shareholders in the Funds will
generally be exempt from U.S. federal income tax on Capital Gain Dividends. The
exemption may not apply, however, if the investment in a Fund is connected to a
trade or business for the foreign shareholder in the United States or if the
foreign shareholder is present in the United States for 183 days or more in a
year and certain other conditions are met.
Distributions
(other than Capital Gain Dividends) paid to individual shareholders that are
neither citizens nor residents of the U.S. or to foreign entities will generally
be subject to a U.S. withholding tax at the rate of 30%, unless a lower treaty
rate applies. The Funds may, under certain circumstances, report all or a
portion of a dividend as an “interest-related dividend” or a “short-term capital
gain dividend,” which would generally be exempt from this 30% U.S. withholding
tax, provided certain other requirements are met. Short-term capital gain
dividends received by a nonresident alien individual who is present in the U.S.
for a period or periods aggregating 183 days or more during the taxable year are
not exempt from this 30% withholding tax. Gains realized by foreign shareholders
from the sale or other disposition of Shares of a Fund generally are not subject
to U.S. taxation, unless the recipient is an individual who is physically
present in the U.S. for 183 days or more per year.
The
Funds (or a financial intermediary, such as a broker, through which shareholders
own Fund Shares) generally are required to withhold and to remit to the US
Treasury a percentage of the taxable distributions and the sale or redemption
proceeds paid to any shareholder who fails to properly furnish a correct
taxpayer identification number, who has under-reported dividend or interest
income, or who fails to certify that he, she or it is not subject to such
withholding.
A
U.S. withholding tax at a 30% rate will be imposed on dividends effective July
1, 2014 (and proceeds of sales in respect of Fund Shares (including certain
capital gain dividends) received by Fund shareholders beginning after December
31, 2018) for shareholders who own their Shares through foreign accounts or
foreign intermediaries if certain disclosure requirements related to U.S.
accounts or ownership are not satisfied. The Funds will not pay any additional
amounts in respect to any amounts withheld.
To
the extent a Fund invests in foreign securities, it may be subject to foreign
withholding taxes with respect to dividends or interest the Fund received from
sources in foreign countries. If more than 50% of the total assets of a Fund
consists of foreign securities, such Fund will be eligible to elect to treat
some of those taxes as a distribution to shareholders, which would allow
shareholders to offset some of their U.S. federal income tax. The Funds (or its
administrative agent) will notify you if it makes such an election and provide
you with the information necessary to reflect foreign taxes paid on your income
tax return.
Taxes
When Fund Shares Are Sold
Any
capital gain or loss realized upon a sale of Fund Shares is generally treated as
a long-term gain or loss if the Shares have been held for more than one year.
Any capital gain or loss realized upon a sale of Fund Shares held for one year
or less is generally treated as a short-term gain or loss, except that any
capital loss on a sale of Shares held for six months or less is treated as
long-term capital loss to the extent that Capital Gain Dividends were paid with
respect to such Shares. The ability to deduct capital losses may be limited
depending on your circumstances.
A
foreign shareholder will generally not be subject to U.S. tax on gains realized
on sales or exchange of Fund Shares unless the investment in a Fund is connected
to a trade or business of the investor in the United States or if the
shareholder is present in the United States for 183 days or more in a year and
certain other conditions are met. All foreign shareholders should consult their
own tax advisors regarding the tax consequences in their country of residence of
an investment in a Fund.
Creation
and Redemption Units
An
Authorized Participant who exchanges securities for Creation Units generally
will recognize a gain or a loss. The gain or loss will be equal to the
difference between the market value of the Creation Units at the time and the
sum of the exchanger’s aggregate basis in the securities surrendered plus the
amount of cash paid for such Creation Units. A person who redeems Creation Units
will generally recognize a gain or loss equal to the difference between the
exchanger’s basis in the Creation Units and the sum of the aggregate market
value of any securities received plus the amount of any cash received for such
Creation Units. The Internal Revenue Service, however, may assert that a loss
realized upon an exchange of securities for Creation Units cannot be deducted
currently under the rules governing “wash sales,” or on the basis that there has
been no significant change in economic position.
Any
capital gain or loss realized upon the creation of Creation Units will generally
be treated as long-term capital gain or loss if the securities exchanged for
such Creation Units have been held for more than one year. Any capital gain or
loss realized upon the redemption of Creation Units will generally be treated as
long-term capital gain or loss if the Shares comprising the Creation Units have
been held for more than one year. Otherwise, such capital gains or losses will
be treated as short-term capital gains or losses. Persons purchasing or
redeeming Creation Units should consult their own tax advisors with respect to
the tax treatment of any creation or redemption transaction.
The
Funds have the right to reject an order for Creation Units if the purchaser (or
group of purchasers) would, upon obtaining the Shares so ordered, own 80% or
more of the outstanding Shares of the Fund and if, pursuant to section 351 of
the Internal Revenue Code, the Fund would have a basis in the deposit securities
different from the market value of such securities on the date of deposit. The
Funds also have the right to require information necessary to determine
beneficial Share ownership for purposes of the 80% determination.
Foreign
Investments by the Funds
Interest
and other income received by the Funds with respect to foreign securities may
give rise to withholding and other taxes imposed by foreign countries. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes. If as of the close of a taxable year more than 50% of the
value of a Fund’s assets consists of certain foreign stock or securities, each
such Fund will be eligible to elect to “pass through” to investors the amount of
foreign income and similar taxes (including withholding taxes) paid by such Fund
during that taxable year. This means that investors would be considered to have
received as additional income their respective Shares of such foreign taxes, but
may be entitled to either a corresponding tax deduction in calculating taxable
income, or, subject to certain limitations, a credit in calculating federal
income tax. If a Fund does not so elect, each such Fund will be entitled to
claim a deduction for certain foreign taxes incurred by such Fund. A Fund (or
your broker) will notify you if it makes such an election and provide you with
the information necessary to reflect foreign taxes paid on your income tax
return.
The
foregoing discussion summarizes some of the possible consequences under current
federal tax law of an investment in the Funds. It is not a substitute for
personal tax advice. You also may be subject to state and local tax on Fund
distributions and sales of Shares. Consult your personal tax advisor about the
potential tax consequences of an investment in Shares under all applicable tax
laws. For more information, please see the section entitled “Federal Income
Taxes” in the SAI.
State
and Local Taxes
Shareholders
may also be subject to state and local taxes on income and gain attributable to
your ownership of Fund Shares. State income taxes may not apply, however, to the
portions of a Fund’s distributions, if any, that are attributable to interest
earned by a Fund on U.S. government securities. You should consult your tax
professional regarding the tax status of distributions in your state and
locality.
Foreign
Taxes
To
the extent the Fund invests in foreign securities, it may be subject to foreign
withholding taxes with respect to dividends or interest the Fund received from
sources in foreign countries.
DISTRIBUTION
The
Distributor, Pacer Financial, Inc., is a broker-dealer registered with the U.S.
Securities and Exchange Commission. The Distributor distributes Creation Units
for each Fund on an agency basis and does not maintain a secondary market in
Shares. The Distributor has no role in determining the policies of each Fund or
the securities that are purchased or sold by each Fund. The Distributor’s
principal address is 500 Chesterfield Parkway, Malvern, Pennsylvania, 19355. The
Distributor is an affiliate of the Adviser.
The
Board has adopted a Distribution and Service Plan (the “Plan”) pursuant to Rule
12b-1 under the 1940 Act. In accordance with the Plan, each Fund is authorized
to pay an amount up to 0.25% of its average daily net assets each year for
certain distribution-related activities and shareholder services.
No
Rule 12b-1 fees are currently paid by the Funds, and there are no plans to
impose these fees. However, in the event Rule 12b-1 fees are charged in the
future, because the fees are paid out of a Fund’s assets, over time these fees
will increase the cost of your investment and may cost you more than certain
other types of sales charges.
PREMIUM/DISCOUNT
INFORMATION
Information
regarding how often Shares of each Fund traded on the Exchange at a price above
(i.e.,
at a premium) or below (i.e.,
at a discount) the NAV of the fund will be available in the future on the Funds’
website at www.PacerETFs.com.
ADDITIONAL
NOTICES
Shares
are not sponsored, endorsed, or promoted by NYSE Arca, Inc. (the “Exchange”).
The Exchange makes no representation or warranty, express or implied, to the
owners of the Shares or any member of the public regarding the ability of the
Funds to track the total return performance of their respective Index or the
ability of the Indexes identified herein to track the performance of their
constituent securities. The Exchange is not responsible for, nor has it
participated in, the determination of the compilation or the calculation of the
Indexes, nor in the determination of the timing of, prices of, or quantities of
the Shares to be issued, nor in the determination or calculation of the equation
by which the Shares are redeemable. The Exchange has no obligation or liability
to owners of the Shares in connection with the administration, marketing, or
trading of the Shares. The Exchange does not guarantee the accuracy and/or the
completeness of the Indexes or the data included therein. The Exchange makes no
warranty, express or implied, as to results to be obtained by the Funds, owners
of the Shares, or any other person or entity from the use of the Indexes or the
data included therein. The Exchange makes no express or implied warranties, and
hereby expressly disclaims all warranties of merchantability or fitness for a
particular purpose with respect to the Indexes or the data included therein.
Without limiting any of the foregoing, in no event shall the Exchange have any
liability for any lost profits or indirect, punitive, special, or consequential
damages even if notified of the possibility thereof.
The
Adviser, the Index Provider, the Exchange, and the Funds make no representation
or warranty, express or implied, to the owners of Shares or any member of the
public regarding the advisability of investing in securities generally or in the
Funds particularly. The Funds do not guarantee the accuracy, completeness, or
performance of the Indexes or the data included therein and shall have no
liability in connection with the Indexes or Index calculation.
The
Index Provider owns the Indexes and each Index methodology and is a licensor of
the Indexes to the Adviser and index receipt agent. The Index Provider has
contracted with an index calculation agent to maintain and calculate the Indexes
used by the Funds. The index calculation agents maintain and calculate the
Indexes used by the Funds. The index calculation agent shall have no liability
for any errors or omissions in calculating the Indexes.
IDG
and its affiliates have not passed on the legality or suitability of, or the
accuracy or adequacy of descriptions and disclosures relating to each Index. IDG
makes no representation or warranty, express or implied, to the owners of the
Funds or any member of the public regarding the advisability of investing in
securities generally or in any Fund particularly, or the ability of the Index to
track general market performance. IDG’s only relationship to the Funds is in the
licensing to the Adviser of certain indexes, related trademarks, and certain
trade names of IDG and the use of each Index for which it is the Index Provider.
Each such Index is determined, composed, and calculated independently by a third
party
on behalf of IDG without regard to the Adviser or the Funds. IDG has no
obligation to take the needs of the Adviser or the owners of the Fund into
consideration in determining, composing, or calculating the Index. IDG is not
responsible for and has not participated in the determination of the timing of,
prices at, or quantities of the Funds to be issued or in the determination or
calculation of the equation by which shares of the Fund are to be converted into
cash. IDG has no liability in connection with the administration, marketing, or
trading of the Fund.
IDG
DOES NOT GUARANTEE THE ACCURACY AND/OR UNINTERRUPTED CALCULATION OF ANY INDEX OR
ANY DATA INCLUDED THEREIN. IDG MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO
RESULTS TO BE OBTAINED BY THE ADVISER, OWNERS OF THE FUNDS, OR ANY OTHER PERSON
OR ENTITY FROM THE USE OF ANY INDEX. IDG MAKES NO EXPRESS OR IMPLIED WARRANTIES,
AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR USE WITH RESPECT TO EACH INDEX OR ANY DATA INCLUDED
THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL THE INDEX
PROVIDER HAVE ANY LIABILITY FOR ANY LOST PROFITS OR SPECIAL, INCIDENTAL,
PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES, EVEN IF NOTIFIED OF THE
POSSIBILITY OF SUCH DAMAGES.
FINANCIAL
HIGHLIGHTS
Financial
information is not available because the Funds have not commenced operation
prior to the date of this Prospectus.
|
|
|
|
|
|
|
|
|
|
|
|
Adviser |
Pacer
Advisors, Inc.
500
Chesterfield Parkway
Malvern,
Pennsylvania 19355 |
Distributor |
Pacer
Financial, Inc.
500
Chesterfield Parkway
Malvern,
Pennsylvania 19355 |
Custodian |
U.S.
Bank National Association
1555
N. Rivercenter Drive
Milwaukee,
Wisconsin 53212 |
Fund
Accountant, Administrator, Index Receipt Agent, and Transfer
Agent |
U.S.
Bank Global Fund Services
615
East Michigan Street
Milwaukee,
Wisconsin 53202 |
Independent
Registered Public Accounting Firm |
Sanville
& Company LLC
1514
Old York Road
Abington,
Pennsylvania 19001 |
Legal
Counsel |
Practus
LLP
11300
Tomahawk Creek Parkway Suite 310
Leawood,
Kansas 66211 |
The
Trust’s current SAI provides additional detailed information about each Fund. A
current SAI dated June 7, 2022, as supplemented from time to time, is on file
with the SEC and is herein incorporated by reference into this
Prospectus.
Additional
information about each Fund’s investments is available in the Funds’ annual and
semi-annual reports to shareholders (when available). In the annual report you
will find a discussion of the market conditions and investment strategies that
significantly affected each Fund’s performance after the first fiscal year each
Fund is in operation.
To
make shareholder inquiries, for more detailed information on each Fund, or to
request the SAI or annual or semi-annual shareholder reports (once available)
free of charge, please:
|
|
|
|
|
|
|
|
|
|
|
|
Call: |
1-800-617-0004
Monday
through Friday
8:00
a.m. – 5:00 p.m. (Central time) |
Write: |
Pacer
Funds Trust, (Name of Fund)
c/o
U.S. Bank Global Fund Services, LLC
P.O.
Box 701
Milwaukee,
Wisconsin 53202 |
Visit: |
www.PacerETFs.com |
|
|
Reports
and other information about each Fund are available on the EDGAR Database on the
SEC’s Internet site at www.sec.gov, and copies of this information may be
obtained, after paying a duplicating fee, by electronic request at the following
e-mail address: [email protected].
No
person is authorized to give any information or to make any representations
about each Fund and its Shares not contained in this Prospectus and you should
not rely on any other information. Read and keep this Prospectus for future
reference.
(The
Trust’s SEC Investment Company Act file number is 811-23024)